Nordics remain ahead of eurozone for growth – Nordea

By: Jonathan Boyd | 11 Jun 2013

The latest forecast from Nordea suggests growth will taper slightly in Finland and Denmark through 2013, but overall the Nordic region will remain on a faster growth trajectory than the eurozone this year and next.

Nordea global chief economist Helge Pedersen said: “All in all, the Nordic economies combined will grow by 1.2% this year, rising to 2% in 2014. This is still significantly ahead of the eurozone economy, which looks set to decline by 0.4% this year and only expand by 1% in 2014.”

Sweden stagnated at the end of 2012. While there were signs of recovery in the first quarter of this year, the data points to continued weakness, for example, in the form of rising inventories. Consumption should be relatively strong given rising wages, low inflation and tax cuts. The country’s central bank is watching household debt levels, and is unlikely to cut rates despite low inflation and high unemployment, with Pedersen forecasting the next rate hike in 2014.

Norway’s economy likewise picked up in the first quarter this year. However, wages look set to rise more slowly, which will impact on consumption and investment activity. Pedersen does not expect an interest rate hike here until later in 2014.

Denmark continues to struggle after some four years of virtually zero growth. But Pedersen is optimistic that the country count start to experience some faster growth later this year and into 2014. Consumption and investment activity will drive the economy.

Finland looks weaker in the short term because of deflated demand abroad and at home for its output. The labour market is expected to deteriorate through 2013, although next year exports, investment and consumption could pick up, Pedersen said.